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Business Studies · 2025 · 3 marks
CBSE 2025 · Region 5 · Set 3 · Q21
Give the meaning of ‘financial market’, ‘capital market’and ‘money market’.Differentiate between 'capital market' and 'moneymarket' on the following basis:(i)Investment outlay(ii)Expected return(iii)Participants
Give the meaning of ‘financial market’, ‘capital market’
and ‘money market’.
Differentiate between 'capital market' and 'money
market' on the following basis:
(i)
Investment outlay
(ii)
Expected return
(iii)
Participants
Marking-scheme solution
(i)
Financial market:
It is a market for the creation and exchange of financial assets.
(ii)
Capital Market:
It refers to facilities and institutional arrangements through
which long-term funds, both debt and equity are raised and
invested.
(iii)
Money Market:
It is a market for short term funds which deals in monetary
assets whose period of maturity is upto one year.
Difference between Capital Market and Money Market
| Basis | Capital Market | Money Market |
| Investment outlay | Investment in capital market i.e. securities does not necessarily require a huge financial outlay. The value of units of securities is generally low. | Transactions entail huge sums of money as the instruments are quite expensive. |
| Expected return | Capital market securities generally yield a higher return than money market instruments. | Money market securities yield comparatively less return. |
| Participants | The participants in Capital market are financial institutions, banks, corporates, foreign investors and retail investors. | The participants in Money market are RBI, financial institutions, banks, corporates. |
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CBSE Class 12 Business Studies past-paper question from the 2025board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.